The State of Competition and Dynamism: Facts about Concentration, Start-Ups, and Related Policies

Over the past few decades there have been troubling indications that dynamism and competition in the U.S. economy have declined. This paper describes the state of competition in the economy, related patterns in entrepreneurship, and policies that promote or inhibit competition. Business dynamism and competition are inherently intertwined, though the linkages are complex. Dominant firms can crowd out new entrants and reduce entrepreneurship; at the same time, a lack of start-ups can reduce the entrants necessary to generate competition. Thus, we examine both growing market concentration and the reduced rate of entry by firms.

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